Cygy Garments

Topics: Philippines, Barriers to entry, Clothing Pages: 3 (987 words) Published: September 26, 2008

Prepare an industry analysis for the Philippine garments industry. Summarize the issues for CyGy Garments. Identify opportunities and threats faced by CyGy.

I. INDUSTRY ANALYSIS - Porters Five Model
A. Threat of New Entrants - The threat of the entry of new competitors For industries with low barriers to entry, such as the garment industry, new firms come and go with great rapidity. Working capital requirements are usually in affordable amount that any entrepreneur can easily starts this kind of business. Sewing machines are easy to find here in the Philippines, unlike other industry, machines are ordered outside the Philippines which make them more expensive because of the added import taxes. There is no secret process in sewing a garment as long as you hire skilled workers to do the job, any entrepreneur can enter the business easily. New entrants have easy access to distribution channels like department stores, specialty boutiques, bazaar stall owners, and direct consumers. New entrants can also expect a low barrier in the form of government policy regarding tax, where buyers and sellers are not compelled to declare their revenues and profits. This industry is classified as part of the underground economy which means that portion of the economy that goes largely undetected by taxing authorities. They include both illegal activities and activities that would be legal except for their unrecorded nature. Since, the garment industry has low barriers to entry, there is a higher risk of entry which results to a lower profits that can be earned in the industry. B. Suppliers – Bargaining Power of Suppliers

Most local garment manufacturers purchase their fabrics from dealers in Divisoria, a well-known bargain trading district in Manila. Since suppliers of imported fabrics are concentrated in Divisoria, this could give them power over buyers like CyGy Garments. Although the Philippines also manufacturers fabrics at about the same price but...
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